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This PDF is a selection from an out-of-print volume from the
National Bureauof Economic Research
Volume Title: In Pursuit of Leviathan: Technology, Institutions,
Productivity,and Profits in American Whaling, 1816-1906
Volume Author/Editor: Lance E. Davis, Robert E. Gallman, and
Karin Gleiter
Volume Publisher: University of Chicago Press
Volume ISBN: 0-226-13789-9
Volume URL: http://www.nber.org/books/davi97-1
Publication Date: January 1997
Chapter Title: The Americans Replace the British
Chapter Author: Lance E. Davis, Robert E. Gallman, Karin
Gleiter
Chapter URL: http://www.nber.org/chapters/c8287
Chapter pages in book: (p. 459 - 497)
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12 The Americans Replace the British
As the brief survey in chapter 2 indicated, a single nation at a
time has typically dominated the world’s whaling activities, but
there has been a series of dis- placements of one leader by
another.’ In the seventeenth century the Dutch replaced the
British. In the eighteenth century the British regained their
former position, but were again replaced three-quarters of a
century later-this time by their former colonists, the Americans.
Before the end of the nineteenth cen- tury the Americans were
replaced by the Norwegians, and within five decades Norway’s
position had been undercut by the Japanese and the Russians. Inter-
national rivalry has been characteristic of the industry; one such
conflict- between Great Britain and the United States-ushered in
the Golden Age of American whaling. The short period of intense
British-American competition (1817-42) provides an ideal laboratory
in which to examine the effects on productivity and profits of the
managerial choices and national-policy con- straints that marked
the British and American experiences.
Whaling’s natural resource, whales, was not the property of a
single country, nor were the stocks available to one country of
better or worse quality than those available to any other. Except
in time of war, the vessels of every mari- time nation enjoyed
equal access to the supply of whales. Moreover, for at least a
century before 1817, the same store of technical knowledge was open
to all competitors. The ship Truelove, for example, one of the most
successful British
1. The argument in this chapter follows closely that in Davis,
Gallman, and Hutchins 1987b. The current American data set,
however, is much larger than the data set underlying the earlier
paper; we have restricted the data set used in this chapter to
voyages that brought back little or no sperm oil; a number of small
errors have been corrected; and productivity has been calculated in
a slightly different way. The most important change is the
restriction of the data set to voyages that brought back chiefly
baleen and whale oil. Also, the current profit estimates are of
pure profits; the figures in the earlier paper were gross of
various costs, and the profit rates published therein are therefore
higher than the rates here. In spite of these differences, the
chief conclusions in this chapter remain the same as those in the
paper.
459
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460 Chapter 12
whalers, was neither designed nor built in Great Britain. She
was commis- sioned in the colonies in 1764 and owned and sailed by
colonists, from colonial ports, until she was captured by the Royal
Navy during the Revolutionary War. In 1780 the ship was sold to
private owners in the United Kingdom. Between then and 1868 the
Truelove completed seventy-two whaling voyages under British
command (Jenkins 1921,194-95). Many of the most successful British
whaling entrepreneurs were American CmigrCs who left Nantucket at
the be- ginning or the end of the Revolutionary War.*
Similarly, sailors and whaling experts were drawn from a variety
of labor markets. The composition of the crew of the Pequod may
reflect literary imper- atives, but it does not distort the whaling
world unduly. Melville sailed in American and Australian whalers in
the 184Os, and knew that their crews were recruited from many races
and many nations. American law required that whal- ing officers be
American citizens, and, if penalties were to be avoided, two-
thirds of the crew also had to be American, but there were ways
around the
These international elements meant that to a large extent the
differences between the British and American fleets reflected
managerial and political de- cisions, not natural endowments or
asymmetric information. First, although before 1825 or 1830 most
US. whaling crewmen were Americans, American agents had access to
an international labor market. After 1830, as the industry expanded
and exhausted the native labor markets, crew lists frequently
contain names such as Joe or Sam Kanaka, and the lists of stations,
or positions, are scattered with descriptions such as Green
Portuguese, Malay, and Spanish Is- lands. The present population of
New Bedford, heavily weighted by descen- dants of
nineteenth-century Portuguese and Cape Verde whalemen, attests to
the international character of the whaling labor market. In Great
Britain, where the government viewed the fishery as a training
ground for the navy, both offi- cers and crew members were usually
British.
Second, both American and British entrepreneurs were required by
law to acquire their vessels from domestic shipbuilders or owner^.^
The Americans were fortunate to be buying from the cheaper
source.
Third, with the exceptions noted above, concerning the
provenance of the
ruies.3
2. Jackson 1978, 93-94, describes negotiations in 1785 between
one of the Rotches, then still at Nantucket, and British
authorities. The proposal was made that five hundred Nantucketers,
with their vessels, move to Milford Haven, on the west coast, and
create a new whaling community. To this plan the London
expatriates-Enderby and Champion-objected strenuously, and in their
objections they were supported by the Board of Customs. The
Londoners would have been pleased to add Nantucketers to their
crews, but found the idea of a competitive whaling community at
Milford Haven unappealing. Rotch left in a huff for Dunkirk, but
plans for a Dunkirk-Nantucket whaling center fell through.
3. For example, the second rule did not hold if crewmen who were
lost by desertion, illness, or death had to be replaced in a
foreign labor market in which there were no American semen. Also,
stateless persons counted as Americans. See An Act concerning the
Navigation of the United States, 1817, Sfafs. at Large of USA
3:351-52; Hohman 1928,453-52.
4. There was an exception: foreign vessels captured in war could
join the American fleet.
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461 The Americans Replace the British
vessel and the composition of the crew, the American effort was
conducted in an economic environment largely free of government
restrictions or subsidies. Heavy British subsidies were not without
cost; major restrictions-direct and indirect-were placed on
managerial decisions by the government.
As a result of American and British restrictions, neither
capital nor labor was completely mobile, and entrepreneurs in the
two countries faced different relative prices. Because of these
differences, or perhaps because of variations in taste or culture,
there were international differences in vessel design, in the skill
composition of crews, and in the organization of voyages. Thus,
interna- tional differences in productivity could and did appear.
The differences are both worthy of and readily susceptible to
analysis. Pure productivity effects- including effects embodied in
the capital stock, the human resources, and the institutional
structure that regulated and constrained economic activity-seem
easier to sort out in whaling than in most other industries.
This chapter focuses on competition between the British northern
fleet and the American Atlantic fleet in the years 1817-42. The
American fleet captured some sperm whales, but the prize both
primarily sought was the baleen whale. The areas hunted by the
British included Davis Strait, Greenland, and the North Atlantic.
The American fleet hunted there, and in the Central and South
Atlantic when winter drove it from the northern water^.^
At the end of the War of 1812 the British fleet dominated world
whaling, and more than two-thirds of the British effort was focused
in the North Atlantic.6 In 1816 British owners sent about 130
vessels to the northern fishery. Although the numbers fluctuated
substantially from year to year, an annual average of more than 125
British vessels sailed for the North Atlantic between 1814 and 1824
(McCulloch 1842, 163). In contrast, in the first peacetime year
(1815) American owners sent no more than 20 vessels there.
Twenty-seven years later, in 1843, the entire British fleet,
northern and southern, had shrunk to fewer than 34 vessels. In that
year the Americans could count almost 675 ships, barks, brigs,
sloops, and schooners (Tower 1907, 121).
To understand the dynamics of the competition, it is necessary
to analyze the activities of the two fleets in the area in which
they came into closest con- tact-the North Atlantic.’
5 . It would be preferable to study fleets hunting over
identical grounds, but this is impossible. Both fleets could have
operated in the North and South Atlantic, but the British did not
choose to send their vessels south in winter (see below) and the
Americans usually did. The sperm whales appearing in the American
records were taken chiefly in the Central and South Atlantic.
6 . It is estimated that there were about 150 vessels in the
northern fleet (vessels bound for Davis Strait and Greenland) in
1820. In the same year the southern fleet (vessels hunting in the
South Atlantic, the Pacific, and the Indian Ocean) is estimated to
have had about 66 vessels (Jackson 1978, 117, 136). (The number of
vessels in 1830 was extrapolated to 1820 on the tonnage of the
southern fleet to obtain the number of vessels in the fleet in
1820.)
7. Data on the British northern fleet have been taken from
British Parliamentary Papers and from Jenkins 1921: Jackson 1978:
McCulloch 1842, 1854. The American data refer to New Bed- ford
vessels hunting in the Atlantic and its northern reaches. The
British northern fleet did not hunt in the Central and South
Atlantic; they sought only baleen whales. In order to increase
the
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462 Chapter 12
12.1 Styles of Whaling
No family is better known in the annals of the British southern
whale fishery than the Enderbys. Like the other old, established
whaling houses-the Cham- pions, the Mathers, and the Roaches-the
Enderbys were American expatri- ates. In 1787 they owned seven
whalers; at the turn of the century they, together with the other
three families, owned thirty-eight with an estimated value of
&273,800. Samuel senior, Samuel junior, and Charles Enderby
were the leading spokesmen for the British industry from the late
eighteenth century until the failure of the Southern Whale Fishery
Company, which Charles founded in 1849 in a last attempt to
“rehabilitate British whaling.” The company survived for only
twenty months. When it went bankrupt, Charles Enderby attributed
the British loss in the competitive struggle with the Americans to
three factors: the failure of British vessel design, the failure of
British seamen, and the high costs of British vessels (Jackson
1978,99, 142; Fairburn 1945-55,2:1008). To these should be added a
fourth: changes in government policy.
For almost a century before 1849 British whalers had received a
stream of direct and indirect government subsidies. According to
William Fairburn (1945-55, 2: 1007), “The whaling industry was not
a success in Britain except during the years that the government
supported it with bounties and warships.” From 1795 until 1824, a
subsidy of twenty shillings a vessel ton (it had been forty until
1790) inflated the returns from a typical voyage by $1,302, while
very high tariffs protected British whalers from foreign
competition in the do- mestic market.8 In 1843, for example, when
the price of whale oil in the Ameri- can market was $0.41 a gallon,
the British tarifSon whale oil was $0.72 a gallon (tariff figure
from Jackson 1978, 121). In this chapter the trends in Brit- ish
and American productivity and profitability are compared, and an
attempt is made to assess the relative contribution of each of the
four factors-vessel design, vessel cost, the quality of seamen, and
government policy-to the mea- sured differences between the two
fleets and to the eventual results of their competition.
Although whaling agents on both sides of the Atlantic had access
to the same technology, there were important differences between
the technical con-
comparability of the two sets of data, we have omitted from
consideration American voyages whose catch was at least 25 percent
sperm oil by volume. See also appendix 12A.
8. Over time the bounty payments fluctuated: 1734-39, 20
shillings per ton; 1740-49, 30 shil- lings; 1750-76, 40 shillings;
1777-81, 30 shillings; 1782-86, 40 shillings; 1787-91,30 shillings;
1792-94,25 shillings; 1795-1824.20 shillings per ton (Jenkins
1921,306). To make comparisons easier, all cost and revenue figures
in this chapter have been denominated in US. dollars of 1880.
Michie (1977-78, 64, 68) says that, in the case of Scottish whaling
in 1763-74, the bounty in- creased average profits from a negative
15.2 percent to a negative 2.2 percent. Over the profitable years
1800-1815 the bounty still accounted for a 3.5 percent return on
investment for the Peterhead fleet (or almost one-tenth of its
total profits) and a 4.3 percent return on investment for the Aber-
deen fleet (more than one-fifth of its total profits).
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463 The Americans Replace the British
figurations of the British and American fleets. The British used
larger vessels and adopted a configuration that displayed a much
higher laborkapital ratio than did that of the Americans. British
owners recalled their vessels after each hunting ~ e a s o n ; ~
most American vessels remained at sea for two or more sea- sons-an
important difference. The institutional choice did not affect the
mode of hunting whales; it did produce differences in the way a
carcass was handled when it was brought back to the vessel.
Finally, the two sets of agents adopted very different methods of
paying their seamen.
In 1815 the typical British northern whaler measured 323 tons,
the typical New Bedford Atlantic whaler, only 168. Over time, the
size of the average vessel rose in New Bedford and fell in
Britain.Io By the turn of the decade there was little difference
between the two: the British average was 302 tons (1841), the New
Bedford, 283 tons (1838).” As Averch and Johnson (1962) have
demonstrated for public utilities, when, because of the decisions
of a reg- ulatory body, profits are in part geared to the size of
the capital stock, under a wide variety of conditions a firm has an
incentive to “gold plate”-that is, to use more than a market
cost-minimizing quantity of capital. In Great Britain the amount of
the government subsidy was based on the registered tonnage of the
vessel, so there was an incentive to use larger vessels than cost
minimiza- tion would have called for. When the subsidy was cut off
in 1824, the incentive disappeared. The decline in British vessel
size can be traced in part to that event.
It was costlier to build vessels in Great Britain than in the
United States. Historians and contemporaries have generally agreed
about the range of the ratio of British to American vessel costs.
It appears that, depending on time, place, and source, a British
vessel cost between 1.5 and 2.2 times as much per ton as a similar
vessel built in the United States (Hutchins 1941, 202). Higher
construction costs, however, were partly offset by lower interest
charges. Over the period 181 6 to 1842 the long-term yield of
British 3 percent consols aver- aged 3.62 percent, and the safest
American securities (in the earlier years Mas- sachusetts 5s [5%
bonds], in the later, Boston City %), 4.96 percent.’*
The typical British northern whaler was rigged as a ship,
carried six or seven small boats, and employed forty to fifty men.
The Brunswick, for example, signed on twenty-three additional crew
at Stromness, Orkney, on 21 March
9. Michie (1977-78, 75) says that by the early 1850s,
“[e]specially amongst the ships traveling the longer distance to
Davis Strait, ‘wintering-out’ was adopted, though it remained an
exception to normal practice.” Eber (1989, 11) says that the
Americans introduced the practice in 1851. It may have been
associated with the exploitation of Cumberland Sound.
10. The size of British vessels actually increased over the
first fifteen years. Chatterton (1926, 47). for example, puts the
average size of the Hull fleet at 330 tons per vessel in 1830.
11. After 1838, however, New Bedford ships moved into the
Pacific and Indian Ocean fisheries, and the American Atlantic fleet
was again dominated by brigs, sloops, and schooners (see
below).
12. Homer and Sylla 1991, 195, 196,299,305. The U.S. yields
refer to Massachusetts 5 s (1816- 21) and Boston City 5s (1824,
1825, 1827, 1829, 1830, 1832-42).
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464 Chapter 12
1824. “With a total of fifty he would be able to dispatch seven
five-oared whaleboats in pursuit of whales, with enough men left
over to handle the ship” (Ross 1985,6).
The New Bedford fleet was more diverse. Between 1816 and 1825
ships accounted for about one-half of the Atlantic voyages, brigs,
sloops, and schoo- ners, the rest. Those proportions changed over
time. In the mid-1830s virtually all Atlantic voyages were
conducted by ships. Then the proportions shifted again; in the
1840s virtually all Atlantic vessels were of the three small types
(brigs, schooners, and sloops) or were barks. An American vessel
usually car- ried only four boats, and the crew averaged fewer than
twenty-five (twenty- five on a ship, twenty on a bark, fifteen on a
smaller vessel). Over the full period, however, despite the
substitution of the smaller barks, brigs, sloops, and schooners for
the larger ships, average crew size rose from just fewer than
twenty to just more than twenty-three.
Differences in vessel and crew sizes gave the two fleets
different labor/capi- tal ratios. On average an American vessel
employed 0.08 men per ton, a British vessel, 0.14, during the
months of active hunting. There is little evidence of a move toward
a single laborkapital ratio. In the years 1817-26 the British used
1.9 times as much labor per ton, and the ratio for 1836-42 was
still 1.7. The disparity may reflect adjustment to differences in
crew quality or in hunting style. Initially, it was probably also a
response to the government’s requirement that an owner of a British
vessel sign two apprentices for each one hundred tons, if he wished
to qualify for the tonnage bonus (Jackson 1978, 72; Crisp 1954,
30).
Weather in the North Atlantic and Davis Strait is foul. Between
storms and the ice pack it was impossible to hunt for more than a
few months in the late spring and summer. Vessels that failed to
retreat south in time were caught in the ice-leading, at best, to
severe hardship, at worst, to sailors’ deaths and vessels’
destruction. In 1830 nineteen of the ninety-one vessels in the
British fleet and one French whaler were destroyed by the ice pack.
They included six double-bottomed and reinforced whalers, designed
for the Arctic ground, that were smashed in a single accident.
Attempting to shelter behind a large ice floe, the Eliza Swan, the
St. Andrew, the BafJin, the Rattle< the Achilles, and the French
Ville de Dieppe formed a line, bow to stem, and very close
together. The floe was driven on the Eliza Swan and the St. Andrew,
and “passing along the line dashed against [the other vessels] with
such energy that within fifteen minutes these four strongly built,
especially fortified whalers . . . were. . . con- verted into mere
fragments of wood.”13 Trapped vessels that escaped being
13. Chatterton 1926, 56-59, 62; Crisp 1954, 60-61. Although the
city did not lose its first whaling vessel until 1813, of a total
of twenty Aberdeen ships involved in whaling over the years 1800 to
1840, 60 percent were lost while whaling (Michie 1977-78, 69-70).
Overall the record was almost certainly not that bleak. Of the
2,561 voyages made to the northern ground over twenty- seven of the
twenty-eight years between 1815 and 1840 (the losses, if any, for
1839 were not reported), 112 vessels were lost at sea-about 4
percent of the total (McCulloch 1854, 642).
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466 Chapter 12
crushed fared little better. In 1836, for example, the British
whaler Dee was caught in the freeze and remained icebound for five
months and eight days (until 16 March 1837). By the time the ship
returned to its home port (Aber- deen), forty-six men had died;
another died later of illness contracted during the winter (Ross
1985, 89-107).
British vessels went north each spring and returned to port when
the hunting season was over. Except in an emergency, no major
repairs were done at sea. Returning vessels were refitted and
repaired in the dockyards of their home ports, and blubber was
refined at a shore-based refinery.
For the Americans the journey south did not always mean a
journey home. Instead of steering for New Bedford or Nantucket each
fall, many vessels headed for the Central or South Atlantic and
continued the hunt. American agents had concluded that it was more
efficient to keep them out for at least two seasons. As a result
repairs, even major ones, had to be made at sea. British vessels
returning home each season required few skilled artisans; in a
forty- to fifty-man crew there would be a cooper and probably a
carpenter (Chatterton 1926, 53). American crews, even though they
were much smaller, almost al- ways included not only a cooper and a
carpenter, but usually a blacksmith and often a sailmaker,
boatbuilder, painter, mechanic, machinist, and caulker, or a second
cooper, carpenter, or blacksmith.
The difference in time at sea also had implications for the
method of storing and transporting oil. In the British case,
blubber was brought back unrefined. After a whale was killed, its
carcass was towed to the ship and attached with blocks and tackle
to the mast. The head was usually severed to make it easier to get
at the baleen, “but a boat can enter the mouth of a whale, and, if
neces- sary, several men could at the same time stand upright and
be at work, remov- ing the whalebone from the upper jaw, the head
of the whale being about one- third of the bulk of the creature
(Ross 1985, 187). At the same time, under the direction of the
specksioneel; or head fat cutter, the expert of experts on the
cutting of whales, men working from mollie boats and from the
carcass itself flensed the blubber off the skeleton, and gummed
(scraped) the bones.I4 The blocks of blubber were then hoisted on
deck, trimmed by the krengers, skinned by skinners, sliced into
small pieces by choppers, and pushed into the speck trough and down
the lull (the process controlled by the lull-boy, equipped with
nippers) to the hold where the skeeman and the king stored the
pieces in barrels (Chatterton 1926, 132; Ross 1985,61-63).
14. On Dutch whalers by the seventeenth century it was the
specksioneer, not the captain, who was the final authority. This
command structure was initially adopted by the British, but by the
late eighteenth century, at least in the northern fleet, the
framework had evolved dramatically. Even while whaling, the vessel
was under the direct command of a regular seafaring captain, and
“the specksioneer was merely a senior harpooner” (Chatterton 1926,
132). Not only had experience demonstrated conclusively that ship
handling and navigation were very important, but captains had
become experts on whales and their habits. Chatterton, however,
says that, on American whalers as late as the early nineteenth
century, the specksioneer still retained some of his earlier
authority.
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467 The Americans Replace the British
The first stages of the American process were similar, but
instead of the cutters’ working from mollie boats, a cutting stage
was rigged and the men worked from the stage. A winch was used to
peel the blubber from the carcass, and the strips were cut into
pieces aboard the vessel. For the British the disas- sembly process
was complete when the blubber was barreled; for the Ameri- cans
there was still much to do. Only after it had been minced and then
boiled in the tryworks was the blubber, by now semirefined oil,
stored in barrels.
An average voyage for a British vessel was five and one-half
months, and there is no evidence of a trend over time. For the New
Bedford sailors who worked the North Atlantic, the average was
almost fourteen months, and the figure rose from just over eleven
and one-half months to just over eighteen in the years before 1843.
It might appear that the British and the Americans drew from
different pools of institutional technology, but this was not the
case. Both technologies (one season and then home for repairs and
refining, versus several seasons with some repairs and refining
effected aboard ship) were known and available in both countries.
Like the choice of different production technolo- gies in high-wage
low-interest and low-wage high-interest countries, the choice of an
appropriate institutional structure was made by the agent-the
entrepreneur who managed the voyage.
Theory suggests that his choice was dictated by the desire to
maximize profits, but the initial conditions were very different in
Great Britain than in the United States-leading the British
entrepreneur to choose short voyages, the American, longer ones. In
the first place, although American vessels did at times shift from
whaling to the merchant service and vice versa, while they were in
the whaling fleet (with few exceptions) they focused solely on
whaling. For the British northern fleet, whaling was often a
part-time activity, an enter- prise of choice in the off-season for
the merchant trade or, a somewhat more permanent transfer, when
that trade was in the doldrums. It was not unusual for a vessel to
operate as a whaler in the summer and transfer to the coastal or
Baltic trade in the winter.
In the second place, profits are maximized within a structure of
relative prices. To the British entrepreneur, effective relative
prices, as opposed to those observed in the market, were until 1824
biased by the mechanism chosen by his government to distribute the
bounty payment. A British shipowner was paid a lump-sum subsidy per
registered ton for each voyage to the northern fishery, and the
Board of Customs counted each round trip from home port to home
port as a voyage. In the same way that the institutional
mechanism-the sub- sidy-induced businessmen to choose larger
vessels than market prices would have dictated, the government’s
policy led British agents to bring their vessels back at the end of
each season. Consider what might have happened had the Board of
Customs chosen the same mechanism for distributing the subsidy to
the northern fleet as to the southern. In that case a premium of
E.500 was paid to each of the four vessels returning with the
largest catch, rapidly declining
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468 Chapter 12
bonuses to some predetermined number of other ships that
performed well, and nothing at all to those who returned relatively
empty (Jackson 1978,
It has often been suggested that relative voyage lengths explain
the differ- ences in the structure of labor payments. Whether or
not that is correct, the institutions that evolved in the two
countries were quite different.I5 In the United States, in addition
to subsistence and occasional supplements, each crew member was
paid a specified fraction of the net revenue earned on the voyage.
The sum of these lay payments rose from about 3 1 percent of net
reve- nues in the early 1840s to about 36 percent in the mid-1850s
(see table 5.15). In Britain the payment was a mix of monthly
wages, bonuses that were “catch” dependent, and until 1824 some
fraction of the government tonnage subsidy. Despite the higher
laborkapital ratio on British ships, annual payments to la- bor
were lower than in the United States. The effect of larger crew
size was more than offset by the shorter length of the voyage.
Thus, labor costs (exclu- sive of subsistence) on British vessels
averaged 24 percent of revenues per voyage of five and one-half
months in the profitable years 1817-36. (See ap- pendix 12C.)
A seaman of each country generated about the same amount of
revenue per year, but the cost of a year’s work by a British seaman
was about two-fifths more than the cost of an American’s work.
Moreover, there are at least three reasons to think that this 40
percent differential, large as it is, represents a lower bound on
the effective ratio of the cost of British seamen to the cost of
American seamen. First, because of the differential demand
generated by the need to repair and refit at sea, there was a much
higher concentration of artisans on American vessels. Second, the
British government continued to attempt to entice American whalemen
to relocate in England or Scotland and lend their services to the
British effort. Finally, in the southern fishery, despite an
average total lay of 44 percent, British owners were unable to
attract seamen as skilled as the Americans. Thus, on average the
quality of American crews was proba- bly higher, and an adjustment
for those quality differences would push the ratio above 1.4.
96-97).
12.2 Productivity Differentials
On the one hand, the victory achieved by the American industry
might be explained purely in terms of market opportunities. That
is, both fleets might have been equally productive, but the
Americans might have been favored by locational factors, lower
input prices (lower opportunity costs for labor, for example), or
more favorable treatment at the hands of their government. On
15. In the southern fishery, where voyages were longer, the
British used a system of payment very similar to the American. Both
made the lay the major component of the remuneration pack- age. See
Jackson 1978, 100; chapter 5 above.
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469 The Americans Replace the British
the other hand, the victory might have resulted from differences
in physical productivity, produced by a better choice of technology
(either narrowly tech- nical or broadly institutional), higher
qualities of nationality-tied inputs (either capital or labor), or
better entrepreneurial skills.
The productivity index introduced in chapter 1 and used
extensively in the analysis of American productivity change
(chapter 8) can, with only minor adjustments, provide the basis for
a comparison of the physical productivities of the two fleets. In
this formulation only two outputs are distinguished: whale oil and
baleen. New Bedford whalers returned from the North Atlantic with
some sperm oil, which has been treated in the calculations as whale
oil. This procedure biases the estimated relative American
productivity downward. Nineteenth-century whalemen recognized that
more resources were required to produce a barrel of sperm oil than
of whale oil, and the long-run relative price of the two
commodities confirms that view.
As before, no allowance is made for vessels lost at sea; only
those that re- turned to port are included. The issues involved in
incorporating lost vessels (and men) are complex. In any case both
fleets displayed virtually identical loss rates; ignoring losses
should not affect relative levels of estimated productivity.
Labor is measured in man-months, capital, in ton-months-the tons
refer- ring to registered vessel capacity. The British and American
formulas for mea- suring tonnage were not identical, but it is
likely that the differences cancel out.I6 The tonnage measures were
probably similar and are assumed to be iden- tical for the purposes
of the calculations.
One major problem remains. Records indicate that, upon returning
from a voyage, an American crew was paid off. Although there were
substantial voyage-to-voyage differences, the typical vessel
remained in port for sixty to seventy-five days (see note 20),
during which time it was refitted and outfitted. At the end of the
refitting and with a new crew aboard, it again put to sea. British
vessels returned after only five and one-half months at sea and did
not set out again until an additional six and one-half months had
passed. For Amer-
16. The British and American formulas for estimating vessel
capacity were similar, but not identical (see chapter 6). If all
measurements were made in the same way, the U.S. rule would result
in measured tonnages just over 1 percent smaller than those
produced by the British rule.
Measurements, however, were not made in the same way. In both
countries breadth was to be measured at the widest place-in the
words of the British law, “from the outside of the outside plank in
the broadest part of the ship.” For the British the measurement was
“exclusive of all manner of doubling planks that may be wrought
upon the sides of the ship”; the American rule makes no mention of
deductions. Since northem whalers were often doubled and sheathed,
the American system probably produced wider breadths than did the
British. Both countries called for measures of length from stem
post to stem post; in the American case the measurement was made
above the main deck, in the British case, along the keel, with an
allowance made for the overhang of the bow but not the stem. Again,
the American dimension was probably slightly larger than the
British (McCulloch 1842,977; An Act for Registering and Clearing
Vessels, Regulating the Coast- ing Trade, and for Other Purposes,
1789, Srars. ar Large of USA 13-65) .
The British rule changed in 1836, but vessels built before that
date were allowed to retain their original measurements. In our
calculations all British whalers were assumed to have been built
before 1836.
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470 Chapter 12
Table 12.1 Total Factor Productivity, British Northern Fleet and
American (New Bedford) Atlantic Fleet, 1817-42 (percentages)
A. American Productivity as % of British Productivity
Variant S Variant L Variant M
18 17-25 74 107 139 1826-35 78 107 131 1836-42 122 187 243
1817-42 89 129 164
B. Indexes of American and British Productivity, Base 1817-25,
Variant L
us . Great Britain
18 17-25 I00 100 1826-35 121 121 1836-42 69 39
Sources; See the text and appendix 12A.
ican vessels the time spent in port was needed to refit and
outfit. Refitting certainly did not take three and one-quarter
times as long in Britain. The ques- tion is, what happened to the
British vessel and crew during that six-and-one- half-month
hiatus?
In an attempt to work around this problem, three sets of
productivity indexes were calculated (see table 12.1). They differ
in their measurement of the time dimension of the two inputs:
man-months and ton-months. Variant S (time at sea) uses months at
sea. Clearly, since the procedure makes no allowance for the time
ships were down during refitting or for unemployment among the crew
between voyages, variant S understates the true volumes of capital
and labor used by the industry. In the American case the
understatement of labor is probably slight; the fleet was expanding
and vessels sailed regularly, regardless of season, so that a
seaman discharged after one voyage could usually sign on for
another immediately, if he chose. That was not the case for British
seamen, who at the end of a voyage would have to wait more than six
months to ship again in the northern fleet. In the meantime British
seamen could seek employ- ment in other activities to tide them
over, but there was no guarantee of reem- ployment.
The variant S estimates thus understate the volume of inputs
used by the two fleets, thereby overstating productivity. The
overstatement is greater for the British, and consequently the
estimates overvalue the comparative productivity levels of the
British fleet.
The variant M (maximum inputs) estimates rest on the assumption
that both men and vessels were held out of other gainful activity
when they were not whaling. Given the relative sea times of the two
fleets, variant M maximizes the relative productivity of the
American fleet.
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471 The Americans Replace the British
If some part of the downtime imputed to British vessels in
variant M was actually spent in another productive activity (the
coasting trade, for example), the estimates would exaggerate the
relative productivity of the American fleet-but not badly. The
opportunities for off-season employment open to British whalers
would have been second-best alternatives (why else would an owner
risk his capital in the waters off Greenland or in Davis Strait
during the whaling season?), much less productive than
whaling.”
A similar argument can be made for the biases inherent in
variant M’s as- sumption that there was no alternate employment for
workers. No plausible maritime alternative could have employed a
majority of the fifty-man British crew, most of whom had little
traditional maritime experience. A large part of a British crew
would have been either unemployed or forced to take less
remunerative, unskilled positions ashore during the long period
between voy- ages. Why would a man risk life and limb in northern
waters if he had a close employment substitute available?
Nevertheless, the most likely estimate of rel- ative productivities
is not the M estimate, but something between variants S and M: that
vessels were usually employed in the off-season, and a fraction, no
more than one-third, of the crew transferred with their vessel to
mercantile pursuits.
Finally both of these indexes incorporate three recognized
biases, each of which leads to an understatement of American
relative productivity. First, the British brought back unprocessed
blubber; Americans tryed out the blubber aboard ship and returned
with semirefined oil. A correct productivity compari- son would
require that some additional labor and capital be assigned to
British production to adjust for the resources used by the
Americans in the first stage of the refining process. Second, the
inclusion of skilled craftsmen in the Ameri- can crews meant that a
great deal of refitting and repair was done at sea. Shore- based
shipyard workers, of course, were employed when the vessel returned
home. The British employed shipyard workers in their home ports for
almost all refitting and repair. Variant S picks up none of those
workers, and variant M captures only a part of the labor done
ashore. Variant M assumes the crew stayed with the vessel while it
was in port, and the crewmen could have been used to refit. British
crewmen were seamen, however, not artisans; unaided, they could not
have carried out many of the repairs needed after a season in the
northern seas. Third, the British brought back only whale oil, the
Americans, a
17. Michie (1977-78,69) finds evidence of vessels used in the
off-season in the Baltic, Atlantic, Mediterranean, and coastal
trades. For example, he cites the case of “two Aberdeen whaling
ships, the June and the Neptune,” that “returned from a voyage to
America in February 1809 in time to sail at the end of the month
for the whale-fishing,” He also says that owners needed to keep
their vessels regularly at work in profitable undertakings and, in
the years 1800 to 1820, “[wlhaling was proving sufficiently
attractive. . . because of good catches and high profits, and so
shipping moved into the whaling trade.” If this argument is
correct, it suggests that the tonnage bonus was sufficient to make
whaling more attractive than the merchant marine, but the industry
without the subsidy was not as profitable. If it had been,
entrepreneurs would have adopted the American institutional
technology of longer voyages.
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472 Chapter 12
mix of whale and sperm oil. To the extent that, in the long run,
prices reflect real costs, sperm whales must have been more costly
(i.e., required more labor and capital) to catch than baleens.
Between 1816 and 1845 the price of sperm oil was, on average, 2.3
times that of whale oil. Both index variants assume that a gallon
of oil was a gallon of oil, thus tending to understate U.S.
relative productivity.
The variant L (most likely) estimates were produced to deal at
least roughly with some of these biases and to establish
productivity levels between the lim- iting S and M variants that
would more closely approach the truth. They make three adjustments
to the data underlying variant S. First, American output lev- els
are raised by 10 percent, to take into account both the trying out
of oil aboard American whalers and the fact that some of the oil
they brought back was the more valuable sperm oil.‘s
Second, the time dimension of the capital input for both the
British and American fleets is taken to be the time at sea plus two
and one-half months for refitting between voyages. The typical
(mean) refitting period for American vessels was, in fact, about
two and one-half months (table 6.7). British vessels were a shorter
time at sea, which might suggest that they required less refitting.
They hunted exclusively in the harsh Arctic environment, however;
American whalers spent only part of their time in the Arctic.
Furthermore, American vessels carried artisans who were able to
make some repairs at sea. Finally, British whalers that operated in
the coasting or Baltic trade in the off-season would need to be
refitted twice, once to clean and prepare them for mercantile
service, once to refit them as whalers. It seems unlikely, then,
that British whal- ers required less time to refit than did
American whalers, and they may have required more.
It is not clear that all British northern vessels found
employment in the off- season, or that those that did were as
productively engaged then as when hunt- ing whales. The third
adjustment is to assume that British whalers and crew- men were
only three-quarters as productive in the off-season as during the
whaling season. Even with these adjustments, the variant L
estimates are likely to be biased against a showing of high
American productivity.
The estimates were made in the manner described in chapter 8
(for further details see appendix 12A), which yields productivity
indexes expressed in nat- ural logs. The antilogs were then taken
and used to compute the figures in table 12.1. The indexes are
highly volatile from one year to the next. To get a clear sense of
the relative performance levels of the two fleets, it is necessary
to study multiyear averages, and such averages appear in table
12.1. The three variants give very different results, but the
preferred estimates (variant L) sug- gest that in the period
1817-35 the productivity levels of the two fleets were
18. Michie (1977-78, 71) places the 1846 cost of “boiling and
coopering” at E l a ton (tun) or about 2.3 cents a gallon-about 7
percent of the American price. Since the whale-oil market was
competitive, that figure must also reflect about 7 percent of the
cost of the oil.
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473 The Americans Replace the British
close (panel A). The Americans seem to have been a little more
productive, and the true margin of difference is almost certainly
greater than the figures in the table show.
In the period 1835-42, when the American fleet came into its
own, the pro- ductivity gap became very wide. Even the variant S
estimates, seriously biased against a finding of high American
productivity, show that the American fleet was more productive. The
measured gap, according to variant S, was 22 per- cent; the true
difference was more likely between 87 percent (variant L) and 143
percent (variant M).
The dramatic relative American gain shown in panel A was not due
to a dramatic improvement in American productivity. As chapter 8
shows, Ameri- can whaling productivity fell during this period, in
the Atlantic fleet as well as the entire industry (table 12.1,
panel B). The relative American gain resulted from an even greater
drop in British productivity. Why was the experience of the British
fleet in this period so unsatisfactory? The fleet had been
shrinking and now consisted of very few vessels. Average
productivity reflected a rela- tively small number of unsuccessful
voyages. As the fleet shrank, it may have lost its best vessels and
men. The few voyages at the end may have been con- ducted by
thoroughly depreciated hulks from which agents were trying to
squeeze a last bit of revenue. Finally, the sharp decline in
productivity may have reflected a thinning out of whale stocks in
the northern grounds, due ei- ther to overhunting or to the passage
of whale groups under the Arctic ice cap to the Western Arctic, a
ground not yet hunted (Jackson 1978, 126-30).
One probable reason the American fleet was more successful is
that it was less dependent on the northern grounds; its versatility
served it well. Also, unlike the British, the American fleet was
expanding and drawing to it able agents, captains, officers, and
boatsteerers. Eventually, the Americans had trou- ble maintaining
the quality of their corps of seamen (see chapter 8) in the face of
the strong labor demands created by the expansion of the fleet.
Nonetheless, there was a vitality to the industry at this time that
could not be matched in Great Britain.
12.3 Differential Profitability
The productivity indexes show that resources devoted to whaling
by Ameri- can firms produced, on average, more oil and bone than
the same quantities of labor and capital did when applied to the
same task by British firms. It is profit, however, not productivity
that induces entrepreneurs to organize economic ac- tivity,
capitalists to provide vessels and whalecraft, and workers to leave
the farm for a life before the mast.
Relative profits are not easy to estimate. Not only are the
British aggregate data open to questions of interpretation, but
there are theoretical problems as well, stemming from the part-time
nature of British whaling. On the one hand, if whaling was a
secondary activity-pursued only when there were no mer-
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474 Chapter 12
cantile opportunities-then any return over total variable cost
represented a net gain to the primary activity. On the other hand,
if management chose to engage in the Baltic or coasting trade only
to make use of vessels when weather prevented Arctic whaling, then
total whaling profits were the profits earned in whaling plus any
return above total variable costs earned in the mercantile
trade.
If the two activities are assumed to have been competitive,
however, it should be possible to estimate whaling profits
directly. Assume that the coast- ing and Baltic trades were
competitive with whaling and that they could be pursued year round.
Then, if firms chose to whale in the summer, not only must the
profits in whaling have been higher than those that could have been
earned in the merchant service, but also they must represent the
actual profits from whaling. In short, it is as if there were two
firms-a whaling firm that operated in the summer and a mercantile
service that operated the rest of the year.I9 We have assumed that
this institutional structure best characterizes the British fleet,
and that assumption provides the basis for the profitability
calculations reported in this section.
Table 12.2 gives several alternative estimates of the average
profits that were (or might have been) earned by a British
entrepreneur, as well as those of his American competitors.2" The
two sets of British estimates in panel A and col- umn 1 of panel B
reflect two alternative assumptions about the relative cost of
British vessels and outfits (see appendix 12B). Panel A shows that
before 1836 both fleets were making good profits, but thereafter
profits fell, disastrously for the British. These patterns are very
similar to those of the productivity data.
The contrasts between panel A and panel B, column 1, however,
are of greater interest. The panel A estimates are based on the
total revenues actually
19. Again, of course, this set of assumptions implies that the
merchant service was more proft- able than off-season whaling in
the Central and South Atlantic. Moreover, each of the three pos-
sible assumptions about industrial structure opens the possibility
that the decline in British whaling could be attributed, at least
in part, to the declining profitability of the Baltic trade, as
trade patterns shifted, andor of the coasting trade, as railroads
offered increased competition.
20. The U.S. profit figures are voyage figures from the New
Bedford fleet averaged by year. Revenues were calculated by
multiplying each element of the annual catch (whale oil, sperm oil,
and whalebone) by its average price in the year of the vessel's
return. Costs included (1) deprecia- tion, (2) value of vessels
lost at sea, (3) cost of outfitting the vessel, (4) forgone
interest, ( 5 ) wages, and (6) crew maintenance. See appendix 12B.
British profits were calculated similarly, except that the sources
were not voyage records but aggregate studies and reports on part
or all of the whaling fleet. These sources include Jenkins 1921;
Scoresby [I8201 1969; Jackson 1978; McCulloch 1842; House of
Commons 1845. All other estimates are drawn from the sources cited.
See appendix 12B.
The American profit calculations are based on the assumption
that vessels remained in port between voyages for an average of 2.5
months-a figure that almost certainly represents an upper bound.
Both the median and the modal stay in port for all New Bedford
voyages returning from the Atlantic ground between 1817 and 1843
was 2.0 months. If, on the assumption that any vessel that did not
put to sea on another whaling voyage for more than 10 months after
it returned was actually up for sale or engaged in some alternative
nonwhaling activity, the distribution of obser- vations on port
time is truncated at that figure, the mean for all 1817-43 Atlantic
voyages is 2.3 months. Of the 21 1 observations 119 have port times
of less than 2 months and another twenty of less than 3.
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475 The Americans Replace the British
Table 12.2 Profit Rates, British Northern Fleet and American
(New Bedford) Atlantic Fleet, 1817-42
A. Actual Rates
u s . Great Britain ~~
1817-25 16.2 7.2 to 22.8 1826-35 17.6 28.5 to 51.8 1836-42 7.9 -
18.6 to - 15.0
B. British Counterfactual Rates"
Fleet Required to Use Fleet Allowed to Use British Vessels
American Vessels
18 17-25 -9.6 to -0.3 4.4 1826-35 - 14.0 to -6.6 -3.7 1836-42
-27.3 to -26.6 -32.5
Sources: See appendix 12B. "Rates the British fleet would have
earned, had the fleet received no subsidies or tariff
protection.
received by British shipowners. They include earnings from the
subsidy as well as from the sale of oil and bone at tariff-inflated
domestic prices. The panel B estimates represent the hypothetical
revenues that shipowners would have earned had there been no
subsidy and had they been forced to market their output at prices
that prevailed in the United States (i.e., prices unaffected by the
British tariff). Finally, the data in panel B, column 2, describe
the profit rates British owners would have earned if there had been
no tariffs or subsidies, but they had been able to buy American
vessels.21
Two conclusions stand out. First, if the British government had
pursued a hands-off policy (that is, no bounties, no tariffs, and
no military blockades) but had continued to demand that owners use
British-built vessels, it is highly unlikely that there would have
been any British whaling industry. By the lower estimate of the
cost of British vessels (1.5 times the American cost), profits in
all three periods would have been negative. Nor would the
substitution of American for British vessels have improved the
situation much (panel B, col- umn 2). At the same time, the owners
of American whalers were earning pure profits of between 7.9 and
17.6 percent.
Second, given the actual levels of government support, profits
in Great Brit- ain were easily sufficient to command new investment
until the mid-1830s. British whaling profits in the period 1817-25
fell into the 7 to 23 percent range, and these returns were in
addition to implicit interest, computed at competitive
21. Oddly enough, loss rates would have been higher if US. hulls
had been used in place of British hulls. Losses would have been
lower with American hulls, but, since U.S. hulls were so much
cheaper than British hulls, investment itself would have been lower
and loss rates would have been higher.
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476 Chapter 12
rates. Between 1826 and 1835 earning rates were even higher.
They almost certainly approached 30 and may have been over 50
percent.
After 1835, despite the continued protection afforded by the
tariff, the Brit- ish industry was in severe straits. Whatever the
measure of vessel cost, profits were negative on average, and
substantially so. Losses more than wiped out imputed interest. No
wonder the industry contracted rapidly.
The analysis to this point has laid out the chief differences
between the two fleets, but it has not systematically explored the
roots of the poor performance of the British. There are data that
allow the issues to be sorted out. The rela- tively high prices of
the vessels that the British were forced to employ were partly to
blame. In order to protect the domestic shipbuilding industry,
Parlia- ment prohibited the importation of foreign-built vessels in
the Navigation Acts (repealed in 1849). A potential shipowner who
wished to sail under the British flag and to enjoy the protection
of both the navy and the tariff had to use a vessel that had been
built in Great Britain or one of its colonies. When the American
states ceased to be colonies, their vessels were included in the
prohi- bition. Had the battle of the North Atlantic been fought
thirty years later, Brit- ish whalemen could have turned to
Canadian shipyards for vessels that were as good as their American
counterparts and sold for even lower prices; in the 1830s and 1840s
the Canadian shipbuilding industry was still in its infancy-
capable of exporting fewer than one hundred poor-quality vessels a
year. (In 1860, or even in 1850-when they could have turned to
American shipyards- there were few whaling entrepreneurs left in
either England or Scotland.22)
Even if British owners had been able to use American-built
vessels while continuing to sell their oil in the protected
domestic market, it is unlikely that the industry would have
remained economically viable after the mid-1830s. Using
American-built vessels would have yielded positive profits in 18
17-25 and 1826-35, but over the last seven years (1836-42) not even
that would have made British whaling profitable.
A complete substitution of American for British vessels would
not have
22. The anti-American prohibition was contained in 26 Geo. 111
c. 60, an extension of the Navi- gation Acts that dealt with the
registration of vessels from the “now American colonies.” The law
was finally repealed in 1849. See Hutchins 1941, 175.
During the years in question the Canadian industry was not in a
position to meet the demands of the whaling industry. Its “vessels,
which in model resembled the American cargo ships, were generally
constructed at first of relatively poor hardwoods, and later of
Canadian spruce, which timbers were often used unseasoned, were
frequently of light scantling [the dimensions of timber in breadth
and depth], and were commonly poorly fitted and fastened.” The
Canadian vessels were, however, inexpensive. In 1840 they sold for
about three-fourths as much as those built in the yards south of
the border. By 1860 the industry had expanded, quality had
improved, and relative prices had fallen. Canadian shipyards had
become a force to be reckoned with in world shipbuilding (Hutchins
1941, 300-301).
Although there were still nearly forty vessels employed in the
northern fishery during the early 1860s (the average for 1861-64
was thirty-eight), most of their activity was directed toward hunt-
ing seals rather than whales. Over the decade 1848-57, for example,
those vessels brought hack on average 11 1 whales a year. At the
same time they were returning 95,927 seals. The seals were valued
for both oil and fur (Jackson 1978, 145-46).
-
477 The Americans Replace the British
saved the industry had there been no bounty and had British
whalemen been forced to compete with Americans in the British
domestic market. Selling at American output prices, they would
rarely have been able even to cover im- puted interest on
investment.
It seems that Fairburn is correct: British whaling was a
creature of war and government policy. Before the Boston Tea Party,
the New England colonies supplied four-fifths of the whale oil sold
in the British market (Jackson 1978, 66). Early in 1783 British
owners were faced by Yankee whalers in the Thames, “with full
cargoes of oil of excellent quality , . . offered below the
prevailing London price” (Fairburn 1945-55,2:996). Given the
industry’s his- tory, the Yankees should not have been surprised
that their attempt to penetrate the British domestic market was met
by the government’s imposing a prohibi- tive tariff on whale oil
and by one more formal attempt to induce Nantucket whalemen to
shift their base of operations to Great Britain. In a free market
the advantage goes to the low-cost, efficient producer, but how
many markets are free? In a market that is not free, the advantage
goes to the producer with the most political clout. In the 1780s
the political position of British whalemen and whale oil merchants
was strong (they had, after all, no domestic competi- tors), and
was reinforced by the international situation. A militarily strong
France lay across the Channel, and it was obvious to all that the
Royal Navy was the island nation’s first line of defense.
For an industry long dependent on the good offices of the
government, it is not surprising that the absolute and relative
decline in the profitability of Brit- ish whaling can, in part, be
traced to changes in government policy, but this is not the only
explanation. The two economies-Great Britain and the United
States-developed at different rates and in somewhat different
directions, with implications for the relative profitability of the
two whaling fleets-at least in the short term.
On the one hand, government policy did change, and with it
profits. In 1824 the government, bowing to free-trade sentiment and
pressure from the manu- facturing sector, broke with half a century
of tradition and refused to renew the tonnage bounty. One historian
has maintained that its value was “[slo slight . . . that its
passing was hardly noticed,” but the bounty had accounted for be-
tween one-fifth and one-fourth of the industry’s profits over the
nine preceding years (Jackson 1978, 119).
Similarly, although the tariff on whale oil remained high until
1843, the impost on the importation of some substitutes was cut
sharply at an earlier date. Take the case of rapeseed oil. Wool is
cleansed with oil before it is spun. Ideally, a manufacturer would
use oil made from the seed of the rape plant, but whale oil could
be substituted in producing cheaper ~ 1 0 t h . ~ ~ The price of
whale
23. Jackson 1978, 55. Jackson’s evidence is from the testimony
of Jervis Walker before the Select Committee to Examine into the
Policy of Imposing an Increased Duty on the Import of Foreign Seeds
in 18 16. Rape is an Old World annual (Brassica nupus) akin to the
turnip.
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478 Chapter 12
oil-even after the duty had been paid-was much less than the
tariff-inflated price of rapeseed oil, and industrial demand was
substantial. Between 1816 and 1820 political efforts by owners of
whalers and whale oil merchants were directed to holding the price
of rapeseed oil above E50 a ton. Between 1822 and 1827 the duty on
rapeseed was gradually cut from E l to 1 shilling (from $4.54 to
$0.24) a quarter. Over the same period, imports of seed rose by 650
percent (Jackson 1978, 120-21).
On the other hand, government policy is not totally exogenous.
In the United States, demand for whale oil declined after camphene,
coal oil, kerosene, and manufactured gas became available. These
products, however, did not reach the American market in significant
quantities until after midcentury. In Great Britain the first coal
gas company was chartered in London in 1782, and by 1820 gasworks
had been built in many of the larger towns. Despite major ex-
plosions in London, Edinburgh, and Manchester, by 1823 “the
superiority and convenience of gas was . . . beyond dispute.” In
London alone, the forty-seven gasometers had a capacity of 917,000
cubic feet.24 The substitution of gas for whale oil had gone so far
that in the 1820s whale oil merchants, in an attempt to regain
their lost market share, began to manufacture gas from whale oil.
This was technically feasible; the enterprise foundered because of
the rela- tively high price of whale oil.
The British and American responses to new technologies raise an
important, but little understood, issue about the long-run effects
of government policy. Why did the Americans lag in the innovation
of whale oil substitutes? How much of the lag can be attributed to
differences in the structures of the two economies (the degree of
urbanization, for example), and how much to differ- ences in the
relative prices of whale oil and coal, reflecting the high British
tariff on whale oil?
Given that it was saddled with a cost structure that made it
noncompetitive in the international market, no tariff or bounty
within reason could have sup- ported the British industry in the
face of an almost complete dearth of domestic demand. It is not
surprising that, when in 1843 Her Majesty’s government re- duced
the tariff on whale oil from $0.72 to $0.16 a gallon, the effect
was felt by only twenty-five shipowners and hardly more than one
thousand seamen.25
12.4 Conclusions
At the end of the Napoleonic wars, British whalemen enjoyed a
near monop- oly of the fishery. The Dutch had turned to other
maritime pursuits, the Royal
24. Jackson 1978, 123. Jackson’s source is the testimony of
Humphrey David before the Select Committee on Gas Light
Establishments in 1823.
25. Jackson 1978, 121, 129. In 1843 the duty on whale oil was
reduced from €27 18s 7d per tun to €6 6s. In 1843 there were
twenty-five ships with 1,146 men engaged in the northern fishery,
but in the two previous years the numbers had been nineteen and
eighteen vessels, with 897 and 830 men, respectively.
-
479 The Americans Replace the British
Navy had eliminated American competition, and government
subsidies had in- creased revenues. British whaling was profitable.
After Yorktown, tariffs had replaced naval squadrons as barriers to
foreign competition in the British do- mestic market, and during
the Napoleonic wars the Royal Navy, charged with isolating Europe,
provided de facto protection in most of the rest of the markets in
the developed world. In 1814 almost two hundred British whalers
hunted in the northern and southern fisheries; fewer than five
American whaling vessels were active.
Twenty-seven years later the American fleet was almost seven
hundred ves- sels, the British, thirty-four. With equal access to
the stock of natural resources and to the menu of alternative
technologies, the two fleets had met in head-to- head competition
in the waters off Greenland and in Davis Strait. In the study of
the relationships among productivity, policy, and economic change,
the mi- crocosm that was the northern fishery is a nearly ideal
historical laboratory. What factors explain the shift in industrial
leadership from the Old World to the New? Was it rooted in emerging
differences in underlying productivity, to differences in input or
output prices, or to changes in the economic envi- ronment?
The evidence indicates that all three factors contributed. On
average, Ameri- can productivity was higher than British, but it
was probably not enough higher to account fully for the observed
differences in profitability, even in the years 1836-42, when the
productivity gap was very wide. Still, it is comforting to note
that the productivity and profit estimates move in parallel.
British profit rates did fall drastically, as British relative
productivity fell.
The British were less productive, and they ultimately became
substantially less profitable. In the middle decade (1 826-35) the
productivity difference nar- rowed, and the British whalers proved
themselves to be more profitable than their American competitors.
If in that period the British had been able to oper- ate in the
protected domestic market but had been permitted to employ
American-built vessels, they would, on average, have earned very
much more than their Nantucket and New Bedford peers. Other “it
might have been” esti- mates, however, indicate that, despite the
profits that could have been earned if only the world had been
different, low British productivity had important implications for
the industry’s long-term survival. Even American-built vessels
would not have saved the British whaling fleet, had the owners been
forced to face American competition in the domestic market for
whale oil and baleen.
Higher wages and vessel costs depressed British profits, but
they do not account for the measured productivity gap. The question
remains, why, if larger crews and shorter voyages were both
unproductive and unprofitable, didn’t British owners and captains
adjust to the superior American technology? That they did not
adjust suggests that, in the British economic environment, American
technology was not superior.
The answer may lie in the quality of British crews. The
literature is replete with horror stories about the sailors who
manned those vessels. Jackson (1978,
-
480 Chapter 12
72-73), writing about the northern fishery during the period of
its most rapid growth, has little good to say about the British
decision “to recruit ‘Greenmen’, a term which had nothing to do
with Greenland, but indicated that they were new to the job-and
therefore cheaper. . . . [Tlhe Robert of Peterhead . . . in 1795
had only two ‘sailors’ among its crew of twenty-three. The final
stage . . . came when even the cheapest native crews were swelled
by half-starved wretches picked up for a song in the
Shetlands.”
Nor does the quality of the crews seem to have improved over
time. An owner appearing before a parliamentary select committee
testified that British seamen, who had been, in his words, “the
best sailors in the world” in 1801 were in 1844 “the worst
description.”26 It should be noted that 1801 was only six years
after the crews had been “swelled by half-starved wretches.” Mean-
while, American “crews, bred in the trade and enthusiastic in their
pursuit of it, were said to be better whalermen than the British”
(Jackson 1978, 141).
Although it is difficult to sort out cause and effect, crew
quality may have affected productivity not only directly but also
indirectly through voyage length. British vessels usually carried a
carpenter and perhaps his mate, and a cooper, but few other
artisans (Jenkins 1921, 189). American vessels carried a wide range
of skilled workmen, including painters, boatmakers, and even
machinists. The British had to depend on shore-based workmen for
the bulk of their refitting and repair. The Americans were able to
effect maintenance and repair during the voyage itself; in fact,
these were primary activities on American vessels during the winter
when weather and ice pushed vessels southward. Without thoroughly
revamping their staffing policies, it would have been impossible
for British owners to adopt American cruising schedules.
And there was no economic reason for the British to revamp. It
was not intransigence that led them to eschew long voyages. With
the bounty payment tied to voyages, innovation of the American
institutional technology would have been costly. The bounty did
disappear in the mid-l820s, but given the lags inherent in any
structural innovation (recruiting and training artisans and
altering the duties of officers and other crewmen would take time),
the industry might well have been out of business before
entrepreneurs could exploit the American institution. The same
circumstances trapped British whalemen in the northern seas,
despite the growing scarcity of whales.
The evidence indicates that, by American standards, British
whalers after 1835 were neither productive nor profitable. Bounties
and warships enabled the British both to replace the Dutch and,
supported by a series of protective tariffs, to fend off incipient
American competition. British dominance was rooted, not in economic
superiority, but in government policy.
Such policies are not immutable. To the extent that they work by
distorting
26. Jackson 1978, 135. The quoted remarks are from the testimony
of Joseph Somes, a Londoner who owned three whalers engaged in the
southern fishery. Whitecar (1864, 122, 123) has very critical
things to say about British crews and officers in the southern
fleet in the 1850s.
-
481 The Americans Replace the British
relative prices, they induce substitution against the protected
commodities. Competition springs up everywhere, and is almost
impossible to restrain. In a technical sense coal oil may have been
an inferior substitute for whale oil; in an economic sense it was a
more than adequate substitute at the tariff-inflated domestic price
of whale oil.
Again, policy frequently derives from some noneconomic argument
in the government’s utility function; the weights assigned to the
argument can, and do, change with conditions-social, political, and
economic. As long as a Con- tinental war was a serious threat, the
British government was prepared to pay (or let its citizens pay)
handsomely for a ready supply of ships and seamen. As the threat of
war receded, the political revenues of the policy receded as well,
but the political costs in taxes, forgone alternatives, and
consumer discontent remained high. The policy became politically
unprofitable.
Finally, the distribution of political influence is not fixed.
Whalemen and oil merchants were forces to be reckoned with in the
eighteenth century; fifty years later textile manufacturers and
merchants commanded the government’s attention.
As the British industry contracted, the American expanded. Fewer
British vessels meant less crowding in the North Atlantic, and
reduced British tariffs meant a larger export market. American
entrepreneurs-New Bedford owners and agents in particular-secured a
commanding position in all the whaling grounds of the world.
Appendix 12A Computing the Relative Productivities of the
British Northern and the American (New Bedford) Atlantic Whaling
Fleets
Three variants of productivity were calculated: variant S (time
at sea), variant M (maximum inputs), and variant L (most likely).
For the American fleet the M and L variants are identical. See the
text for a full account of these variants.
Productivity Formula
The formula for calculating the productivity of an individual
voyage is de- scribed in chapter 8. Only American voyages can be
analyzed in this way; data on individual British voyages are not
available. In order to compare the two fleets, computations must be
made at a fleet level, treating all of a fleet’s voy- ages in one
year as one grand voyage. The formula for doing so can be broken
into four parts.
1. (The share of oil in the value of output of the given fleet
[i.e., British or American] in the given year, plus the mean of the
shares of oil in the value of
-
482 Chapter 12
output of both fleets across all years) times (the natural log
of the output of oil of the given fleet in the given year, minus
the mean of the natural logs of the outputs of oil in both fleets
in all years).
2. Part 2 is identical to part 1, except that the word bone is
substituted for oil, wherever oil appears,
3. (The share of labor income in the value of output of the
given fleet in the given year, plus the mean of the shares of labor
income in the values of output of both fleets in all years) times
(the natural log of the labor input into produc- tion [number of
crewmen] in the given fleet in the given year, minus the mean of
the natural logs of the labor inputs in both fleets in all
years).
4. Part 4 is identical to part 3, except that the word capital
is substituted for labor, wherever labor appears. (Capital input
into production is represented by tonnage.)
Labor is measured in man-months (the number of the vessel’s
crewmen times the number of months of the voyage), capital, in
vessel ton-months (the number of the vessel’s tons times the number
of months). Labor income equals the value of lays (American), or
wages (British), plus subsistence. The produc- tivity of a given
fleet in a given year equals
((Part I + Part 2)/2) - ((Part 3 + Part 4)/2). The resulting
productivity measurements are expressed in natural logs. They may
also be given in the form of the antilogs, and that is the form
underlying the figures in table 12.1. Comparisons may properly be
drawn within each fleet, across time, or between fleets.
Data Sources: United States
The American data were taken from the Voyages and Crew Counts
data sets (see chapter 3). In order to enter the calculation, a
voyage had to sail for the Atlantic Ocean, Hudson Bay, or Davis
Strait; sail from and return to New Bed- ford; return between 1817
and 1842; and carry home a ratio of sperm oil to whale oil of no
more than 0.25. In addition we had to know the size of its crew,
its tonnage, and the length of its voyage. Two hundred and
eighty-one voyages met these conditions. (Since each voyage was
allocated to the year in which the vessel returned to New Bedford,
the calculation omits voyages that resulted in the condemnation,
loss, or sale of the vessel before it could return to New Bedford.
See the text for a further treatment of this topic.)
Shares of Labor and Capital Income in the Value of Output. The
amount of income flowing to labor was computed for each voyage as
the sum of the value of the crew’s lay shares and the cost of their
subsistence. The value of lays was taken to be 31 percent of the
value of the catch (see the text, table 5.15, and appendix 9A). The
cost of subsistence depends on the size of the crew. In 1844 it
cost $35 a year to feed one whaling crewman (see appendix 5C). The
algo-
-
483 The Americans Replace the British
rithm for subsistence is thus $35 times the food price index2’
times the number of men in the crew times the length of the voyage
in years.
Lay value and subsistence amount were summed at the voyage
level. These total labor income amounts, and the per-voyage value
of catch amounts, were then summed by amval year. The ratio between
them is labor’s share of output, and the remainder is capital’s
share (see table 12A.1).
Data Sources: Britain
Oil Outputs. Tuns of oil were taken from Gordon Jackson (1978,
270).28 See table 12A.2. A tun was an old British measure
approximately equal to 252 British gallons (169 n. 18). The British
gallon was equal to 1.20095 American gallons. The American
barrel-the unit in which our American oil figures were generally
reported-was equal to 31.5 American gallons. In order to convert
British tuns to American gallons, then, we multiplied Jackson’s oil
catch figures by (252 X 1.20095)/31.5, or 9.608.
Oil Prices. British oil prices (per tun) were taken from J. R.
McCulloch 1842, 162; 1854, 1404. Between his two volumes McCulloch
gives a complete series of prices for the southern fishery for the
years 1817-42. His prices for the northern fishery, present only in
the 1854 edition, are not a complete series. Where the southern and
northern prices are both present, they are almost al- ways
identical (and we see no reason why they should in fact have
differed). In those few cases where the southern and northern
prices differ in McCulloch, we have used the price that seems more
reasonable: for 1825-26 the southern price, for 1840-42 the
northern price.
Bone Outputs. Tons of bone for 1817-34 and 1837-41 come from
Gordon Jackson 1978, 270. Tons of bone for 1835 and 1836 were
estimated on the basis of the output of oil in these years and the
ratio (.0533) of tons of bone to tuns of oil, 1831-34 and 1837-39,
for the British fleet. The output of bone for 1842 was estimated in
the same way as the outputs for 1835-36, except that the estimating
ratio (.0340) was computed on the basis of bone output to oil
output in 1840 and 184 1.
American bone output was reported in pounds. In the nineteenth
century the British used the short ton of two thousand pounds
(McCulloch 1842, 1165). We multiplied British bone figures by two
thousand to make them equivalent to American figures.
27. Warren and Pearson “Foods” wholesale price index (US.
Department of Commerce 1975,
28. Jackson gives as his source McCulloch 1854, 1542, and notes
one change he made to series E-54). divided by seventy-two (the
1844 value), so that 1844 = 1.0.
McCulloch’s figures.
-
Table 12A.1 Shares of Labor Income and Capital Income in the
Value of Output, American (New Bedford) Atlantic Fleet, 181742
~ ~~~~
Year Labor Capital Year Labor Capital
1817 1818 1819 1820 1821 1822 1823 1824 1825 1826 1827 1828
1829
,3860 ,3715 ,3828 ,3713 ,3495 ,3742 ,3913 ,3619 ,3552 .3541
,3568 .3673 ,3785
,6140 ,6285 ,6172 ,6287 ,6505 .6258 ,6087 ,6381 ,6448 ,6459
,6432 ,6327 ,6215
1830 1831 1832 1833 1834 1835 1836 1837 1838 1839 1840 1841
1842
,3533 ,3670 ,3753 ,3771 .3890 ,3865 ,3924 ,400 1 ,4121 .4 174
.3933 ,3599 ,3947
,6467 ,6330 ,6247 ,6229 ,6110 ,6135 ,6076 ,5999 ,5879 ,5826 6067
.640 1 ,6053
Sources: For a description of the data sources and computation,
see the text.
Table 12A.2 Data on the British Northern Whaling Fleet,
1817-42
Oil Oil Price Oil Value Bone Bone Price Bone Value Tonnage
Tonnage Crewmen Year (tuns) (f per tun) (f) (tons) (f per ton) (f)
Setting Out Returning Returning
1817 1818 1819 1820 1821 1822 1823 1824 1825 1826 1827 1828 1829
1830 1831 1832 1833 1834 1835 1836 1837 1838 1839 1840 1841 I
842
10,871 14,482 11.401 18,745 16,853 8,663
17,074 9,871 6,370 7,200
13,186 13,966 10,672 2,199 5,104
12,610 14,508 8,214 2,623
707 1,356 4,345 1,441
412 647 668
30 36 33 30 19 22 21 22 36 34 27 25 27 43 43 28 25 23 28 32 35
25 25 25 31 30
326,130 52 1,352 376,233 562,350 320,207 190,586 358,554 217,162
229,320
356,022 349,150 288,144 94,557
219,472 353,080 362,700 188,922 73,444 22,624 47,460
108,625 36,025 10,3GQ 20,057 20,040
244,800
539 666 517 946 923 422 92 1 534 350 400 733 802 608 119 273 676
802 442 I40 38 65
236 79 14 22 23
80 80 80 80 80
185 185 185 210 220 243 33 1 325 255 213 159 156 247 242 282 22
1 210 192 196 198 244
43,120
4 1,360 75,680 73,840 78,070
170,385 98,790 73,500 88,ooo
178,119 265,462 197,600 30,345 58,149
107,484 125,112 109,174
10,716 14,365 49,560 15,168 2,744 4,356 5,612
53,280
33,880
48,084 50,362
50,546 50,709 38,144 36,759 35,013 34,75 1 30,414 28,273 28,665
28,812 29,396 28,608 26,393 25,294 24,955
20,183 16,789 11,809 12,530 9.966 5,742 5,118
5 I ,082
23,482
46,48 1 49,720 47,227 49,592 46,244 35,622 35,816 34,698 33,171
28,813 27,952 27,740 27,517 23,258 27,633 24,764 24,966 23,970
21,498 19,521 16,153 11,506 12,530 9,323 5,742 5,118
6,156 6,516 6,589 6,749 6,261 4,883 4,744 4,798 4,604 3,999
3,880 3,856 3,836 3,143 4,020 3,510 3,553 3,440 3,115
2,392 1,727 1,907 1,441
897 830
2,858
Sources: For a description of the data sources and computation,
see the text
-
485 The Americans Replace the British
Bone Prices. Bone prices for 1817-21 and 1822-24 are available
in Jackson (1978, 1 18).29 We divided the 1824 British price by the
1824 American price, and multiplied each succeeding American price
by this ratio in order to extrap- olate missing British prices.
Tonnages Setting Out. Knowing the size of the fleet that set out
in each year is necessary to compute the size of the fleet that
returned. The tonnages of vessels setting out in the northern fleet
in 1817-34 were taken from Jackson 1978,270, in 1841-42 from
British Parliamentary Papers (House of Commons 1845). Tonnages for
1835-40, missing in these sources, were estimated by a regres- sion
on numbers of vessels and total tonnages for the years 1816-34 and
1841- 42. The data on numbers of vessels were taken from Jackson
1978, 270. (The number of vessels sailing in a year is the sum of
the number sailing for Green- land and the number sailing for Davis
Strait.) The estimation equation is
Tons = -360.86 + 359.64 VG + 276.78 VD - 1.594 YRVG + 1.715 YRVD
(-1.0) (+32.5) (+20.8) (-2.5) (+3.4)
where VG is the number of vessels sailing for Greenland, VD is
the number of vessels sailing for Davis Strait, YRVG is YEAR X VG,
and YRVD is YEAR X VD. (YEAR is the year in question minus 1800.)
The figures in parentheses above are t values. The adjusted R2 is
.9993 and the F value is 7,561.9.
Tonnages Returning. Productivity is figured only for vessels
that returned safely to port. The number of vessels sailing and the
number lost in each year 1817-42 are given in Jackson 1978, 270.
Dividing the initial tonnage by the number of vessels sailing gives
tons per vessel. Subtracting the number of ves- sels lost from the
number sailing gives the number returning. Multiplying the tons per
vessel by the number returning gives the tonnage returning. (We as-
sumed that, on average, a vessel lost had the same tonnage as a
vessel setting out.)
Crewmen Returning. Jackson (1978, 129) reprints from British
Parliamentary Papers total tonnage and crew figures for the years
1830-32 and 1841-42.30 McCulloch (1842, 1241) prints total tonnage
and crew figures for the years 1817-24. We calculated crewmen per
ton using Jackson and McCulloch, and estimated ratios for 1825-29
and 1833-40 by interpolation. (There is no clear trend in the
ratios for 1817-24 and 1830-32; therefore, we used as the interpo-
lator for the years 1825-29 the mean ratio for 1822-24 and 1830-3
1. There is a clear trend thereafter. We estimated the ratios for
1833-39 on the assumption that the ratio rose at a steady pace
between 1832 and 1840.) Multiplying crew- men per ton by returning
tonnage gives returning crewmen.
29. Jackson used local prices at Hull. 30. These tonnage figures
don’t precisely match those Jackson prints on page 270.
-
486 Chapter 12
Shares of Labor and Capital Income in the Value of Output. The
share of in- come flowing to labor was 34.1 percent in 1817-25,28.2
percent in 1826-35, and 61.8 percent in 1836-42. (See appendix 12B
for a description of the data sources and computations. These
shares can be computed from table 12B.3, lines 3, 7, and 8, as
[line 3 + line 8]/line 7.) The share flowing to capital in each
period was the remainder, or 65.9, 71.8, and 38.2 percent.
Appendix 12B Computing Profit Rates for the British Northern and
the American (New Bedford) Atlantic Whaling Fleets
Table 12B.1 Computation of Average Profit Rates, American (New
Bedford) Atlantic Fleet, Returning Years 181742
A. Computation of Average Values per Ton as of Sailing Dates,
1880 Prices ($)
Total Investment Huli" Outfitb Subsistence' (hull + outfit +
subsistence)
1817-25 40.66 18.89 3.74 1826-35 45.10 18.20 3.84 1836-42 44.73
24.36 6.56
63.29 67.14 75.65
B. Computation of Average Values per Ton of Hulls on the Return
to New Bedford ($)
Net Value of Hull Hull* Depreciationd (hull - depreciation)
18 17-25 40.66 1.41 39.25 1826-35 45.10 1.56 43.54 1836-42 44.73
2.24 42.49
C. Computation of Average Net Revenues per Ton ($)
Interest Gross Revenue' Lays' Vessels Lost' Forgoneh Net
Revenue'
- ~
18 17-25 59.28 18.38 0.88 3.71 36.3 1 1826-35 63.49 19.68 2.08
3.87 37.86 1836-42 77.38 23.99 3.14 6.63 43.62
-
Table 12.B1 (continued)
D. Computation of Average Profit Rates ($)
Total Net Return Original Profit Net Value of Hull (net hull +
Investment Ratel
on Return Net Revenue revenue) (from panel A) (%)
18 17-25 39.25 36.31 75.56 63.29 16.17 1826-35 43.54 37.86 81.40
67.14 17.59 1836-42 42.49 43.62 86.11 75.65 7.86
Note: All monetary values are in 1880 prices. The deflator is
the Warren and Pearson “All Com- modities” wholesale price index
(U.S. Department of Commerce 1975, series E-52). Values were
adjusted to the 1880 level by dividing them by these index numbers
(divided by one hundred). ’The value of a vessel at the beginning
of the voyage was computed by multiplying its TONNAGE by BCOSTCN
for SAILYR. These values and tonnages were summed up for 75 voyages
arriving in the years 1817-25, 161 voyages amving in 1826-35, and
74 voyages arriving in 1836-42. The sum of values was divided by
the sum of tonnages. (For BCOSTCN-building cost per ton ac- cording
to the Commissioner of Navigation, in 1880 prices-see chapter 6 and
table 6.10.) Both the British and the American vessels were valued
at new prices for purposes of these calculations, since we have no
information on the market values of these vessels. bThe outfitting
cost for each voyage was computed from the OPTM1880 value for the
year in which the voyage began, times the vessel’s TONNAGE, times
the INTERVAL of the voyage. (IN- TERVAL is the length of the voyage
in calendar months.) These costs were summed up within each period
and the sum divided by the corresponding sum of vessel
tonnages.
OPTMl880 represents complete outfitting costs for the whole
voyage, exclusive of costs of provisioning and costs of outfitting
the men. The outfitting cost per ton month, in prices of 1880, was
computed as follows:
1. The costs of outfitting the Calla0 in 1871 and provisioning
the bark during the voyage she began in that year were computed
from data reported in Moment 1957. (This is an exceptionally clear
and detailed accounting of outfitting costs.) Moment (271) reports
total debits for outfitting the vessel of $33,472. He (272) reports
that the captain spent $1,900 on provisions during the voyage.
$33,472 + $1,900 = $35,372.
2. The value of subsistence and the value of advances were
subtracted. We figured subsistence as $35 per year per crew member,
in 1844 prices (see appendix 5C), times 33 crew members times 50/12
(the voyage lasted fifty months). In order to convert to 1871
prices, we multiplied by 1,80556-the ratio of the Warren and
Pearson “Foods” index number for 1871 (130) to the index number for
1844 (72)-yielding $8,689. Of the amount that Moment reports as
outfitting costs, $3,788 was charged to the crew (i.e., advances).
$35,372 - $8,689 - $3,788 = $22,895.
3. This figure was divided by the tonnage of the Callao times
the INTERVAL of her 1871 voyage. $22,895/(323.7 tons X 50 months =
16,185) = $1.41458, or $1.415.
4. This figure, in turn, was carried to other years on the
Warren and Pearson “Textile Products” wholesale price index (US.
Department of Commerce 1975, series E-56). (The idea is that
outfit- ting costs fluctuated, roughly, with textiles [sails]
prices.)
5 . These numbers were then deflated using the Warren and
Pearson “All Commodities” whole- sale price index. ‘Subsistence was
calculated by multiplying the number of men in the vessel’s crew
for the voyage by $35 (subsistence per man-year in 1844 prices; see
appendix 5C). the result multiplied by the ratio of the Warren and
Pearson “Foods” wholesale price index number for the year in